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Southeast Asia faces the conflicted challenge of meeting the rising need for affordable and reliable energy while simultaneously cutting emissions. (Photo: iStock)
Green transformation investment in Southeast Asia has resumed growth, increasing significantly by 20% in 2023. However, it remains far from sufficient to achieve emissions reduction goals. The latest research describes the situation as “woefully off track” and urges governments to enact clearer policies. If development proceeds smoothly, it is estimated that an additional income about 300 billion USD per year could be generated.
International management consulting firm Bain & Company, Standard Chartered Bank, Temasek, and its green investment company GenZero released an annual Southeast Asia Green Economy Report on Apr. 15. The report indicated that green investment in Southeast Asian region amounted to 6.3 billion USD last year, an increase of 1.1 billion USD from 2022, marking a return to a growth after two consecutive years of contraction.
Dale Hardcastle, director of the global sustainability innovation center at Bain & Company, attributed the reversal in capital flows to the emergence of innovative finance, as well as companies’ greater interest in green power opportunities.
The report also highlights 13 investment opportunities in the Southeast Asian region, including regenerative agriculture, utility-scale solar and wind power, and electric vehicles with charging infrastructure. It is estimated that these opportunities could generate an additional income of 150 billion USD by 2030.
However, these investments remain far short from the 1.5 trillion USD required to fund the region in the next decade. The cumulative investments from both public and private sectors have amounted to only 45 billion USD since 2021.
“Southeast Asia has an outsized role to play in the global net zero ambition. However, the region faces the dual, often conflicted challenge of meeting the rising need for affordable and reliable energy while simultaneously cutting emissions,” said Kyung-Ah Park, Head of Sustainability at Temasek.
The report highlighted, about 60% of the regions’ coal-fired plants are relatively new, making them difficult to shut down due to long-term purchasing agreement and investment commitments. Moreover, clean energy represents only 10% of their total energy supplies, while fossil fuel subsidies significantly surpass investments in renewables.
Researchers point out that if current development trends persist, combined with the projected increase in energy consumption, emissions within these 10 countries will exceed the 2030 targets by 32%. They urge these countries to seize the opportunity to act; otherwise, climate risks will continue to escalate.
